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Remodeling Retailers Flourish In Multi-Showroom Settings

By Joanne Cleaver

Posted: July 4, 2007

Delafield - Whatever
glamour clings to the notion of home remodeling can wear off like cheap
paint during the ensuing marathon of shopping for cabinets, tile, paint,
wall coverings, appliances, and integrated digital music, video and security
systems.

Bob Tobe doesn't like
running around any more than the next person, and as president of Floor360,
a Madison retailer and wholesaler of flooring, he was in a position to
do something about it.

Four years ago, he
opened the Design Mart in Verona, south of Madison, to house a collection
of seven independent showrooms - a high-end mall for home remodeling retailers.
Floor360 occupies one of the showrooms; the others house independent retailers
with complementary home improvement fixtures and finishes, such as wall
and window coverings.

Customers and designers
liked the concept. Participating retailers saw sales jump - Floor360's
own sales rose from $5 million in 2003 to $9.5 million the next year.

Now, Tobe is taking
his showrooms on the road. The second Design Mart cost $3.5 million to
build and opened last fall in Delafield. Tobe has plans for additional
Design Marts in Wisconsin, northern Illinois and possibly elsewhere, aiming
partly to expand Floor360 in mart settings and partly to diversify his
real estate investments. Tobe expects Floor360's 2007 revenues to hit
$17 million, with $2 million coming from the Delafield location.

"It's innovative
to bring it to this market, bringing a regional approach to a local level,"
said Michelle Kowalski, manager of Kohler Store development for the Kohler
Co. "The test will be, who did they get there?"

The under-one-roof
convenience draws customers to multi-showroom marts and explains why more
of them are opening across the country, especially in major cities, Kowalski
said. Kohler is in the Luxe Home ultra-premium, open-to-consumers, building
goods mart opened last year by Chicago's famed Merchandise Mart.

This fall, Kohler
will open another showroom in the Abt store in Glenview, Ill. Abt's new
design campus will include a 4,000-square-foot coffee shop where designers
can meet with customers, said Michael Abt, president of the family-owned
store.

The main Abt store,
now 70,000 square feet, "still has acres of appliances, but we evolved
the showrooms by partnering with vendors," he said. Abt's full-size
kitchens exhibit appliances from Gaggenau, Bosch and Miele, and its cavernous
electronics studios are wired with Bose and Bang & Olufsen.

Showrooms, he said,
have to be carefully managed to make money.

"Per foot, it's
not such a payoff. You need a lot of volume to make it work financially."

Tobe is taking the
Design Marts in a slightly different direction. The Delafield Design Mart
has only three showrooms, instead of the seven in Verona, Tobe said. Each
showroom costs about $350,000 for the retail tenants to outfit with working
models of the fixtures and finishes they sell.

"I wanted three
quality partners, but when you have six or seven, it's not always so easy
to find them," he said.

Tobe believes that
metro areas the size of Milwaukee are big enough to support a couple of
Design Marts. His plan is to open them in northern Illinois, elsewhere
in Wisconsin, and possibly Minneapolis and beyond.

Delafield Design Mart
stores landed orders and projects from the day it opened, said Terri Schmidt,
president of the showroom division of DreamKitchens.

While homeowners like
marts for browsing and shopping, designers use them to save time and money,
said Katie Carlson, a designer with I-Design Inc. in Pewaukee.

Even small marts offer
discounts of 15% to 25% to designers. Easy access to a vast array of materials
such as wood, stone and flooring relieves designers of the hassles of
buying samples and either returning or keeping them in inventory, she
said.

The biggest savings,
though, is reduced errands to multiple building supply retailers.